A profit-maximizing, monopolistically competitive car wash washes 40 cars per day, and its total cost $200 and currently makes an economic profit of $280.In the long run, everything else equal, the
A)car wash will charge more than $12 per wash.
B)car wash will wash more than 50 cars per day.
C)car wash will need to hire new workers to wash more cars.
D)car wash will wash less than 40 cars per day.

Question

Quizplus · Accepted Answer

In the long run, new firms will enter the market due to the economic profit being made, increasing competition. This will decrease the demand for this particular car wash, leading to fewer cars washed per day if prices and costs remain constant.

A Profit-Maximizing, Monopolistically Competitive Car Wash Washes 40 Cars Per